22 August 2017

Kenya: Equity Bank HY Profit Drops By 7.4% to 9.4B As Assets Cross Sh500 Billion

Nairobi — Equity Group Holdings has posted a 7.4 percent decline in profit from the Sh10.1 billion it posted in the first six months of 2016 to Sh9.4 billion same period in 2017.

The Group's Chief Executive Dr. James Mwangi has said the headwinds in the financial sector including the interest rate capping and uncertainties in the operating environment have impacted Kenya's unit, which contributes over 90 percent of the profit to the Group.

"Regional Subsidiaries have grown to contribute 10pc of total income from 5pc and we project the units outside Kenya contributing 40pc in 5 years," said Mwangi.

The bank's profits from its operations in Tanzania, Rwanda, Uganda and DRC all grew by double digits, with Uganda's profit growing by an exceptional 139 percent.

South Sudan branch, however, saw a drop of profit by a massive 125 percent, due to the ongoing conflict, to just break even.

The Group's assets hit half a trillion shillings, a growth of 14 percent for the period ended 30th June.

Mwangi says the growth in assets is attributed to the Bank's innovative, diversified and transformative business model.

He says the Bank is now redirecting its focus on an adjusted business model that includes innovation, digitization, non-funded income growth and regional diversification.

"The new business model of Equity Bank focuses on growing and expanding non-funded income, regional diversification, liquidity and balance sheet agility and treasury operations," said Dr. Mwangi at an investor briefing.

Other focus segments include asset quality, innovation and digitization, and efficiencies and cost optimization.

"The revised business model has played a big part in cushioning the business as well as boosting value creating for shareholders. Innovation had proved to be a great enable in driving growth. We are already registering efficiency gains from digitization," adds Dr. Mwangi.

The interest rate capping regime saw a decline in funded income by 15 percent to Sh17.9 billion while non-funded income grew by 20 percent to Sh13 billion during the six months.

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